Arena Authority to have $365 million in construction money by Ju - WDRB 41 Louisville News

Arena Authority to have $365 million in construction money by July

Louisville's Arena Authority expects to have $365 million in construction money in the bank by early July.

For months, the Arena Authority has had to delay the sale of construction bonds.  The national economic downturn is to blame for problems that have threated the start of full construction and the new arena's November 2010 opening.

State funds are being used to demolish buildings and get the arena site ready for construction.  But the Arena Authority could not raise construction money until it could find a company willing to insure the bonds.

Arena Authority Chairman Jim Host calls this "the biggest single hurdle, in my judgment, we had."

After months of work, the Arena Authority has finally found a bond insurance company that has not been crippled by the home foreclosure crisis.

For an $18 million premium, Assured Guaranty will insure the $360 million bond issue needed to cover all construction costs.  That will make investors more willing to buy the bonds. 

Metro Council President Jim King explains, "It reduces the risk the city will have any downside should the arena fail, and I don't think it's going to fail, but what we didn't want to see is an empty building sitting there and no one around to pay the bondholders."

Tom Rousakis of Goldman Sachs says, "There seems to be order back in the market, municipal market, exhibiting some health, and it's pricing better."

With insurance in place and interest rates down a bit, the Arena Authority's bond expert says the plan now is to sell bonds in June.

Demolition of the LG&E substation and implosion of the Humana Building will be complete by late summer.  With construction money in the bank, the first work to build a new arena will begin late this year.

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